Key takeaways
- “China plus one” means adding a second country to a supply chain that still runs primarily through China, not replacing China outright.
- Vietnam and India can absorb assembly, but most of the components going into that assembly still come from China.
- What does not transfer is tooling, process knowledge and yield history, which are the parts that took years to accumulate.
- A second qualified factory is a real fixed cost in tooling and quality checks, so it is usually premature before the product has proven demand at its first factory.
Vietnam and India can absorb a growing share of final assembly for hardware products, but neither has replaced the depth of China’s component supply chain or its accumulated tooling and process knowledge. What actually transfers when you move production is assembly labor and simple mechanical parts. What does not transfer nearly as easily is the supplier ecosystem for complex components, the tooling relationships built over years, and the yield history that tells a factory how to hit spec on the first run.
Why founders start looking past China
The move toward manufacturing diversification is now a mainstream strategy for large manufacturers, not a fringe hedge, though the pace and scope are still evolving.
- Bain & Company’s 2024 survey of 166 senior executives (90 percent at companies with more than USD 1 billion in revenue) found 81 percent planned to move supply chains closer to home or to their main markets, up from 63 percent in 2022.
- In the same survey, 69 percent reported moves to shift operations out of China, up from 55 percent in 2022.
- Only 2 percent reported having fully completed a reshoring or diversification plan, even at that scale of company. This is a multi-year process, not a single sourcing decision.
These figures describe large enterprises, and a small hardware company does not have the same balance sheet or negotiating leverage. The direction is still a useful signal: even the companies most equipped to absorb the cost and complexity of moving production are finding it slow.
What “China plus one” means in practice
“China plus one” describes adding a second country to a supply chain that still runs primarily through China, rather than replacing China outright. Even Chinese manufacturers are doing this: Chinese firms invested roughly USD 24 billion into ASEAN manufacturing in 2023, about a third of China’s total outbound manufacturing investment that year, according to McKinsey’s analysis of the trend. For a small hardware company, the practical version of this strategy is narrower: identify which specific parts of your build (final assembly, a subassembly, a mechanical component) could plausibly move, and treat the rest of the supply chain as still anchored where it already works. That is a different exercise from choosing between manufacturing in the USA or nearshoring to Mexico, which trade Asian supply chain depth for proximity rather than for a second Asian source.
Vietnam: strengths and current limits
Assembly capability versus component supply
Vietnam has become a serious assembly location for electronics, but the components going into what it assembles frequently still originate in China.
| What the data shows | Source |
|---|---|
| 67 percent of global PCB exports originate in China | Altana supply-chain analysis, 2025 |
| Vietnam sent more than 7,000 PCB shipments to the US in 2024, worth about USD 78 million, and roughly 20 percent of that value still consisted of upstream Chinese sub-components (ICs, transformers, diodes, capacitors) | Altana supply-chain analysis, 2025 |
| China still produces well over 70 percent of the world’s iPhones, attributed to two decades of supply chain depth, component suppliers, tooling expertise, and a trained engineering workforce | TechWireAsia, March 2026, citing industry reporting |
Vietnam’s assembly role is real and growing for specific product categories. It is not yet evidence that the underlying component ecosystem has moved with it. Our own look at manufacturing in China covers the case for staying with a single, deep supply base rather than splitting across countries.
India: strengths and current limits
Domestic market access as part of the argument
India’s own push into electronics component manufacturing shows a similar pattern: fast growth in assembly and simpler parts, with the more complex components still imported.
- Under India’s Electronics Component Manufacturing Scheme, 106 projects had been approved as of an August 2026 report, representing an expected production value of roughly ₹82,243 crore and about 9,588 direct jobs.
- What is localizing well: electro-mechanical parts, enclosures, wire harnesses, sensors, coils, speakers, and standard PCBs.
- What India still imports: advanced semiconductors, sensors, rare-earth materials, specialty chemicals and laminates, high-density-interconnect PCBs, SMT-grade passive components, and display components.
- Domestic value addition in Indian electronics manufacturing is commonly reported at roughly 18 to 20 percent, meaning much of the visible growth is assembly value rather than component value.
- Indian component manufacturing carries an estimated 14 to 18 percent cost disadvantage against mature global manufacturing clusters, driven by input tariffs, capital costs, logistics, and the depreciated-asset advantage incumbent clusters already hold.
India’s large domestic consumer market is a genuine strategic argument for building capacity there, since it reduces dependence on any single export destination, though the sources available do not put a specific figure on how much that access is worth to a foreign hardware brand deciding where to manufacture.
What does not transfer when you move production
Tooling, process knowledge, and yield history
Assembly is a comparatively small share of a product’s total value, which is exactly why it moves faster than everything underneath it. Research from the American Enterprise Institute on Apple’s supply chain found that assembling a device like an iPhone costs around USD 10, a small fraction of the unit’s value, while Chinese-sourced component content per iPhone rose from near zero in 2009 to about USD 104 by 2018. The advantage China holds is concentrated in components and process depth, not in the act of assembly itself.
In our experience at Inventornest, offshore manufacturing is not simply about finding the lowest unit price. Components can perform differently in the actual application than what their suppliers claim on a datasheet, and selection has to be followed by practical testing regardless of which country the factory sits in. A new country does not remove that step. If anything, it adds a variable, since the new factory has not yet accumulated its own history with your specific parts.
- What tends to move: final assembly, simple mechanical parts, enclosures, cable and wire harness work.
- What tends to stay behind: deep semiconductor and display supply chains, high-density PCB fabrication, and the tooling relationships and yield curves a factory has already worked out for a specific design.
The realistic cost and time of a transfer
A supply chain transfer takes longer and costs more than a location comparison suggests on paper. Injection tooling for a simple plastic part can run around USD 5,000, while a complex, multi-cavity mold for a consumer electronics enclosure can exceed USD 100,000, and that tooling does not automatically transfer cleanly to a new supplier without requalification. Component lead times for critical parts can run 20 to 50 weeks on top of several weeks of freight, which is why even large companies with dedicated supply chain teams report that a diversification plan typically spans years rather than a single fiscal quarter.
In our experience at Inventornest, our own sourcing rule is to avoid relying on components available from only one vendor wherever practical, and to check availability through multiple suppliers. That discipline reduces the risk a country move is trying to solve in the first place, independent of which country the factory is in.
When a second country is premature for a small product
A second qualified factory in a second country is a meaningful fixed cost: new tooling or tooling requalification, a new set of quality checks, and a new relationship with no yield history behind it. For a single product at low volume, that cost rarely pays for itself before the product has proven demand at its first factory. A second country tends to make sense once volume is large enough that a supply disruption at one factory would be genuinely damaging, not as a first move before the product has shipped at all.
Frequently asked questions
Should a small hardware startup diversify manufacturing away from China?
Usually not before the product has proven demand at its first factory. A second qualified supplier is a real fixed cost, and for a low-volume product it is often premature until a China-only supply chain has become a demonstrated risk rather than a theoretical one.
Is Vietnam a good alternative to China for electronics manufacturing?
Vietnam is a strong and growing option for final assembly and simpler electronics work. Its component supply chain for more complex parts still runs substantially through China, so moving assembly there does not remove China from the picture entirely.
What does India offer for hardware manufacturing right now?
India is scaling assembly and simpler electro-mechanical component manufacturing quickly, supported by government incentive programs, along with the strategic benefit of a large domestic market. Advanced semiconductors, sensors, and display components are still largely imported.
Does moving production to a new country also move the tooling?
Not automatically. Tooling can often be physically relocated, but a new factory still has to requalify it against its own equipment and process, and it starts without the yield history the original factory had built up.
How long does it take to qualify a new factory in another country?
Longer than a first estimate usually assumes. Even large companies with dedicated supply chain teams report that a full diversification effort typically spans years, not months, once tooling requalification and component lead times are accounted for.
How does this compare to the offshore versus domestic manufacturing decision?
A choice between Vietnam, India, and China is a decision within offshore manufacturing. It does not resolve the separate question of offshore versus domestic production, which involves different cost, IP, and lead-time tradeoffs covered in our manufacturing location decision guide.
Where Inventornest fits
Wherever your production ends up, in China, Vietnam, India, or split across more than one, our approach to component selection stays the same: avoid single-vendor dependency where practical, and verify parts through testing rather than a supplier’s datasheet alone. If you are weighing where to manufacture a new hardware product, our OEM services team can help you think through the tradeoffs before you commit. Get a quote to talk through your specific product.
